Hi. This morning you took a nice long setup for 44-30-10 pips. Can you please clarify this? If my risk is 1%, shall I open 1/3rd of my risk (so total risk 1%) or the whole 1% on each add on (and in this case I would risk 3% on such a trade)?
In the 1st case (0.33% on each add on), assuming my stake is 1 lot, the total gain on the above trade would be 145.20+99+33 = $277.20. In the 2nd case (1% on each trade) it would be 440+300+100 = $840.
I hope my question is clear. Thanks
To Immy about money management
-
immy
- Founder
- Posts: 9654
- Joined: 22 Nov 2010, 16:46
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MONEY MANAGEMENT EXCELLENT QUESTION
Good MM Question. Real Traders Ask such question. Nice one!
My technique is if you are to trade 1Lot. I'd recommend (and I am no financial expert. this is for education purpose only)
I do it like this.
.25 Lot on first entry. Because Setup 1 has lower probability due to trend not confirmed yet. We call this Rent Trades. Your risk is low so you quickly find out if its going your way or not. By keep your first entry to a quarter lot only you greatly minimise the effect of the 50% losing trades. then if you have successfully taken Setup 1, you would take Setup 2 with .5%. Thats when I'm more confident because trend is confirmed and if I get chance I will stick the last .25% at a third aims level. depending on how price goes. if second entry zoons 50 pips its ok no need to put 3, but then again there might be days you even get place for 4 and 5th add-on. for that I would use the same .25%.
HATE absolutely hate closing half. I Add on. this is reverse pyramid type of trade. It ensure we are conservative during sideways market and aggressive during trending. moreover, my trades are usually taken on a 15pip SL but if its more than 15 I'll adjust my percentage lots size to that. so If my first entry position size is based on 20 pips the rest will also be based on 20 pips.
THIS IS THE MOST IMPORTANT QUESTION.
I hope it makes sense
My technique is if you are to trade 1Lot. I'd recommend (and I am no financial expert. this is for education purpose only)
I do it like this.
.25 Lot on first entry. Because Setup 1 has lower probability due to trend not confirmed yet. We call this Rent Trades. Your risk is low so you quickly find out if its going your way or not. By keep your first entry to a quarter lot only you greatly minimise the effect of the 50% losing trades. then if you have successfully taken Setup 1, you would take Setup 2 with .5%. Thats when I'm more confident because trend is confirmed and if I get chance I will stick the last .25% at a third aims level. depending on how price goes. if second entry zoons 50 pips its ok no need to put 3, but then again there might be days you even get place for 4 and 5th add-on. for that I would use the same .25%.
HATE absolutely hate closing half. I Add on. this is reverse pyramid type of trade. It ensure we are conservative during sideways market and aggressive during trending. moreover, my trades are usually taken on a 15pip SL but if its more than 15 I'll adjust my percentage lots size to that. so If my first entry position size is based on 20 pips the rest will also be based on 20 pips.
THIS IS THE MOST IMPORTANT QUESTION.
I hope it makes sense
What is the Secret of Successful Trading?
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
-
alright
- Posts: 11
- Joined: 14 Aug 2011, 14:05
- 14
-
immy
- Founder
- Posts: 9654
- Joined: 22 Nov 2010, 16:46
- 14
Re: To Immy about money management
I like the later as well as the former. but later is just too damn attractive.alright wrote: assuming my stake is 1 lot, the total gain on the above trade would be 145.20+99+33 = $277.20. In the 2nd case (1% on each trade) it would be 440+300+100 = $840.
I hope my question is clear. Thanks
What is the Secret of Successful Trading?
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!